Federal regulators should turn down the Southwest Power Pool's temporary plan to ensure adequate real-time electricity supplies in its Western balancing authority area, the grid operator's market monitor said Friday, warning the proposal would hamper power trading between regions. In filings at the Federal Energy Regulatory Commission, the market monitoring unit joined the Western Area Power Administration, Basin Electric Power Cooperative, and Guzman Energy in challenging SPP's proposal for its Western region, which primarily covers portions of Colorado and Wyoming. The monitor argued the plan would penalize participants unfairly, could be gamed, and lacks clarity.
The West BAA contains roughly 9.2 GW of nameplate capacity, but asset owners made only 4.7 GW available from April through August, according to SPP. The grid operator had anticipated about 6.5 GW would be accessible during that period. Between April and August, SPP issued three energy emergency alerts along with other warnings in its West BAA. The expanded SPP footprint, which entered the Western Interconnection in April, includes Basin Electric, Colorado Springs Utilities, Deseret Generation and Transmission Cooperative, Municipal Energy Agency of Nebraska, Platte River Power Authority, Tri-State Generation and Transmission Association, and three WAPA units. Under rules FERC approved, the SPP West BAA has no resource adequacy requirement in place until June 1, 2027.
SPP's market monitoring unit stated that "by effectively requiring each market participant to maintain a physically balanced position in real time, the proposal interferes with economic trade of energy between regions." The monitor also warned the plan's energy price-based penalty would produce inefficient outcomes and probably trigger behavior that conflicts with SPP's stated policy and reliability goals. SPP determined that supply shortfalls in its West BAA were mainly caused by market participants failing to bring sufficient energy into the market, according to the grid operator's Sept. 4 proposal.
To fix the problem, SPP proposed temporarily requiring two market adequacy evaluations for participants with obligations in its Western BAA. The first evaluation would check whether an asset owner's available energy in a day-ahead reliability unit commitment operating hour falls short of its obligations for that hour. SPP would run a second evaluation 20 minutes before an operating hour begins. If SPP declares an energy emergency, asset owners lacking enough energy to fulfill their obligations would face penalties. Revenue from those penalties would be distributed to asset owners that held excess energy during emergency hours.
SPP asked FERC to approve its proposal for an Nov. 11 effective date. The grid operator proposed a tentative sunset date of June 1, but left the door open to extending it depending on whether the temporary requirements remain necessary. The plan is designed as a stop-gap measure to address supply issues until mandatory resource adequacy rules take effect in mid-2027.